Port City – Next Financial Hub in South Asia?

Colombo Port City Development is the largest foreign direct investment (FDI), Sri Lanka has attracted since its independence. With the phased completion of this massive project Colombo can be easily positioned as a financial hub similar to London, New York or Singapore. These were revealed during a well-attended seminar organized by the Chamber of Construction Industry, Sri Lanka on 10th July 2015 at the Taj Samudra Hotel, Colombo.

Port City Development is undertaken by China Communication Construction Co., which is a “Global Fortune 500” company, through its fully owned subsidiary, China Harbor Engineering Construction Co. (CHEC). This company CHEC is presently operating in 80 countries and in Sri Lanka it has undertaken 28 projects. These include the Kaduwela to Dodangoda sections of the expressways and Hambantota Port.

The total investment in the land reclamation phase lasting 3 years is US$ 1337 Million (LKR 180.5 Billion). It is noteworthy that CHEC is making this investment, without any guarantee from the Sri Lanka Government and is taking all the commercial, technical and financial risks. The total proposed reclamation area is 233ha (575 Ac) out of which 108ha (267 Ac) will be allocated to the developer on a 99 year lease, 62ha (153 Ac) to Sri Lanka Port Authority (SLPA) on freehold and 63ha (155 Ac) declared as public areas. The total foot print of the development area in 485 ha (1200 Ac). The value of the sellable land in extent of 62ha that the SLPA is due to inherit will be LKR 195 Billion when estimated at LKR 8.0 Million per perch.

As per the concession agreement all the necessary statutory approvals including the EIA and environment clearance has to be obtained by the SLPA as the project implementing agency. Statutory authority to grant approval for the reclamation of the sea lies with the Department of Coast Conservation (CCD) whereas the approval for the offshore mining of sand and for quarrying rock shall be granted by the Central Environment Authority (CEA). Also, the EIA clearance for any development work on the reclaimed land in extent of 233 ha shall be obtained from CEA.

On a EIA submitted the CCD has issued the development permit to reclaim 233 ha on 23rd Oct 2014, subject to several conditions. Also, the Geological Survey & Mines Bureau (GSMB) with the concurrence of CEA has issued an Industrial Mining License on 16th September 2014 for a sand borrow area. The Government has to provide all the required utilities such as water, electricity, gas, road access to up to the boundary of the Port City, as in the case of other large property development projects. All buildings and other developments within the Port City will have to follow the UDA regulations and in addition to the guidelines of the Port City Management Co, which will be formed jointly by the CHEC and SLPA. An interesting feature in the planned development is that the 108 ha allocated to CHEC and the 62 ha allocated to SLPA are not in 2 large parcels of land but are in several small parcels intermingled. As such neither CHEC nor SLPA will control a large area in this city.

The total development is planned over 20-25 years with the reclamation work to be completed within 3 years. Once the total extent is developed it is expected that the investment on buildings and other facilities that will come up will add up to US$ 13.0 Billion. CCC is also planning to invest on few iconic buildings. This development will also encompass a marina, which had been a greatly felt need for several years to attract high end tourists coming in Yachts. Inspite of the large foreign direct investment and much benefits to our economy, there has been many concerns raised on this project. In response the Government appointed a committee of 12 members in February 2015 to report on the concerns raised.

As recommended by this report, further studies on the environmental impacts is to be undertaken by SLPA. Present controversy reminds of the many protests staged in 2004 against the construction of our first expressway from Kottawa to Matara. Now the public demand is to construct more expressways.

This project when completed will definitely transform Colombo into the more livable city in South Asia for the international businessmen. With corrects strategies by the planners it could lead to establishing the next financial and logistic hub of South Asia in Colombo. It is up to us to grab this opportunity.